Download This PaperEverything But the Powers of 2 and 3
16 Pages Posted: 25 Aug 2007
Date Written: August 22, 2007
Abstract
In this paper, we generalize the power-of-2 and the power-of-3 monetary denomination systems (MDS) widely studied in the literature by considering the class of the power-of-α MDSs for all real α strictly between 1 and infinity. We show that for theoretical distributions of prices as well as for an actually observed distribution of prices, the power-of-2 and the power-of-3 MDSs are never the most efficient MDSs.
Keywords: Currency denomination, Monetary Denomination Efficiency
JEL Classification: E4, E47
Suggested Citation: Suggested Citation
Bounie, David and Houy, Nicolas, Everything But the Powers of 2 and 3 (August 22, 2007). Available at SSRN: https://ssrn.com/abstract=1009192 or http://dx.doi.org/10.2139/ssrn.1009192
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